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A federal appeals court in Massachusetts reversed the dismissal of a lawsuit by Aetna accusing Pfizer of illegally promoting the off-label use of Neurontin, the first victory after a long chain of defeats for plaintiff lawyers pursuing so-called "third-party payer" litigation on behalf of insurance companies and health plans.

The First Circuit Court of Appeals, in a decision yesterday, ruled that a lower court erred when it refused to allow Aetna to sue Pfizer over what it called a racketeering conspiracy to induce physicians to prescribe Neurontin for off-label uses like treating bipolar disorder.

Third-party claims have been rejected by appeals courts in California, Georgia, New York and other regions because the plaintiffs have been unable to convince judges that the insurance company suffered a quantifiable loss. Physicians prescribe drugs for different reasons, the defense theory goes, and it is impossible to prove that every single physician was susceptible to the marketing pitches and allegedly manipulated clinical data drug companies are accused of using to convince them to prescribe their products.

"The key here is the ability to pursue the claims statistically," said Peter St. Phillip, an attorney with Lowey Dannenberg Cohen & Hart who represented Aetna in the appeal. "If you require Aetna’s jury to look at 818,000 prescriptions one by one, it is impossible, so you’ve already resolved the case for Pfizer before the merits can be determined.”

The appeals court also upheld a $140 million jury verdict in favor of the Kaiser Foundation, and allowed a class action led by a union pension fund to proceed.

Plaintiff lawyers started filing third-party lawsuits against Pfizer a decade ago after the Justice Dept. launched a whistleblower investigation into the company's off-label marketing practices. Pfizer settled with DOJ for $430 million in 2004, pleading guilty to a variety of illegal practices including paying doctors to attend conferences in places like Florida and Hawaii, and giving doctors misleading information about Neurontin's efficacy.

The whistleblower in that case, Dr. David Franklin, was awarded $25 million. But so far plaintiff lawyers have failed to convince courts to award damages to insurance plans that allegedly paid inflated drug bills as a result of the conspiracy. So far the 2nd, 3rd, 9th and 11th Circuits have rejected such claims, St. Phillip said.

"There's tons of theses cases out there, and they’ve all gone to the defendants," he said. "This is kind of the pendulum swinging back."

In its decision, the First Circuit noted that it was required to consider all evidence in the light most favorable to the plaintiffs. Aetna claimed that Pfizer's Warner-Lambert unit targeted the insurance plan, with its 13 million members, as a prime target for increased Neurontin sales. The tactic worked, the plaintiffs said, with Aetna paying for 43 million off-label doses of the drug between 1995 and 2004.

By 2003 the plan had moved the drug to "non-preferred status, " however, and the company also acknowledged it hadn't received any misleading marketing materials directly from Pfizer. Aetna also failed to produce a single doctor who claimed to have relied on a marketing misrepresentation.

"Relying on physicians' individual recollections as to their prescribing decisions might have been an unreliable approach," the court said, however. A simple "but-for" analysis suggests that Aetna's statistical evidence could lead a jury to conclude the health plan paid for more Neurontin doses than it should have because of Pfizer's illegal marketing tactics.

St. Phillip said Aetna's experts prepared studies that corrected for the prescribing patterns of individual physicians to still paint an overall picture of inflated Neurontin use. The appeals court rejected Pfizer's argument that Aetna must prove that none of its members received any benefit from the drug.

The decision means this case can proceed to trial, where Aetna is seeking $95 million plus treble damages.